Future of the Affordable Care Act – Supreme Court Scenarios - McDermott+Consulting

Future of the Affordable Care Act – Supreme Court Scenarios

The Supreme Court of the United States is scheduled to hear oral arguments on November 10, 2020, in a case that may decide the fate of the Affordable Care Act (ACA). The recent passing of Justice Ruth Bader Ginsburg thrust the Court back into the spotlight, as US Senate Republicans work to fill her vacant seat before the November 3, 2020, election. With the ACA argument on the docket so close to the election, the stakes are high. In this +Insight, we examine potential scenarios for the future of the ACA.

How Did We Get Here?

In 2012, in NFIB v. Sebelius, the Supreme Court held that the ACA’s mandate requiring individuals to maintain health insurance was constitutional. The Court’s decision focused on the penalty the ACA imposed on individuals without insurance, which the Court found to be within Congress’s taxing power. At the same time, the Court held that the individual mandate could not be justified as an exercise of Congress’s Commerce Clause authority.

In 2017, Congress enacted as part of larger tax bill a provision that reduced the mandate penalty to $0. With the taxing-power rationale now undermined, new lawsuits sprang up attacking the ACA’s constitutionality. One such suit was brought by Republican state officials in Texas and other Republican attorneys general in more than a dozen other states. The district court in that case held both that the individual mandate was unconstitutional and that it could not be severed from the remainder of the ACA. The district court therefore held that the entire law must fall. In a 2–1 decision, the US Court of Appeals for the Fifth Circuit agreed that the penalty-free mandate was unconstitutional, but remanded the case to the district court to reconsider the severability issue. Subsequently, the Supreme Court agreed to review the Fifth Circuit’s decision. Oral arguments are scheduled for November 10, 2020.

The Supreme Court will review three questions:

  • Do the challengers have standing to bring the lawsuit under Article III?
  • If they do, is the individual mandate unconstitutional?
  • If it is, can the individual mandate be severed from the rest of the ACA?

The Likely Scenario

It is likely that the Court will find that the challengers have standing to bring the case, given that standing does not establish a high bar and the state challengers have demonstrated injury. From there, the Court would consider whether the individual mandate is unconstitutional. In light of its 2012 ruling in NFIB, the Court is likely to affirm that the individual mandate is unconstitutional without a corresponding tax consequence, and can no longer be justified under Congresses taxing authority.

It also seems likely that a majority of the justices would hold that the individual mandate is severable from the remainder of the law, allowing everything but the mandate to stand. That’s so for two reasons. First, the statutory language and context support the conclusion that Congress would not have intended the entire law to fall with the individual mandate, particularly after nearly a decade of congressional amendments and add-ons that also would be invalidated by a decision that the mandate is not severable. Second, and equally important, courts—and the modern Supreme Court, in particular—are generally reluctant to strike down entire laws if they can avoid it, especially with respect to such consequential enactments as the ACA. To be sure, there is a unique political valence to the ACA litigation, and the district judge struck down the entire law. But in light of the far-reaching (in many respects, unpredictable) consequences of a complete invalidation, we anticipate that the Court will take the more modest path and strike down the mandate alone, allowing the balance of the law to remain in place.

Other Scenarios

In an alternative but less likely scenario, the Court may hold that there is standing and the mandate is unconstitutional, but that the mandate is not severable, meaning that the Court would strike down the entire ACA. In this scenario, it is difficult to predict how exactly the law would be struck from the US Code, a decade after its passage and with many subsequent amendments and an unquantifiable number of ensuing regulations and administrative actions.

Another possible scenario could occur if Amy Coney Barrett is not confirmed before the November 10, 2020, argument. In that event, the case would be decided by an eight-justice Court, making a 4–4 tie possible. If that occurred, the Fifth Circuit’s decision would be affirmed without opinion. Alternatively, the Supreme Court could simply affirm the Fifth Circuit’s conclusion that further analysis by the district court is warranted. In either of those cases, the litigation would be returned to the district court to address the issue of severability anew. This would most likely mean years of additional litigation before the case ultimately returns to the Supreme Court.


The Supreme Court’s decision in the case should be expected between early May and late June 2021.

There will be an approximately one-month delay between issuance of the opinion and the issuance of the Supreme Court’s judgment, allowing some time for stakeholders to determine the practical outcome. Once the Supreme Court issues its judgment, the case will go back to the Fifth Circuit, which is likely to take at least a few days to determine its own next steps.

The Presidential Election and the Role of Congress

Healthcare policies are likely to remain front-and-center for the remainder of the presidential election campaign as the country continues to endure the COVID-19 pandemic. With significant job losses and accompanying loss of employer-based coverage, whichever party is in power in 2021 will face significant health policy issues.

Congress could at any time enact, and the President could sign, a law simply dispensing with the individual mandate or enacting a low dollar penalty, thus restoring the law to the construct validated in NFIB, without taking on the broader questions of health care coverage expansion. This quick fix is unlikely as a first resort given the broader priorities on both sides discussed below.

Former Vice President Joe Biden has articulated strong interest in expanding coverage, including creating a public option to compete in the exchange marketplaces and lowering the eligibility age for Medicare. In order to lower the uninsured rate, Biden also supports enhanced tax credits and allowing those in non-Medicaid expansion states to buy into the public option. Enactment of these policy changes likely would hinge on Democrats controlling both chambers of Congress, as Republicans likely would not support most policies that expand the federal government’s role in the insurance market.

If Biden is elected and the ACA is struck down, Biden would need to work with Congress to restore the ACA before advancing his agenda mentioned above. If he enjoys a Democratic majority in both chambers, this will be easier to achieve. If the Senate remains in Republican control, however, there may be contentious negotiations regarding which aspects of the law to keep and how to address Republican policy priorities.

President Donald Trump, on the other hand, has repeatedly called for a “repeal and replace” approach to the ACA. When pressed for what would replace the law, he has alluded to presenting a new plan from his Administration. No details have been made available on a new approach, other than a commitment to protect those with pre-existing conditions. The President has also simultaneously repeatedly expressed support for protecting much of the consumer protections created under Title I of the law, including barring discrimination based on pre-existing conditions. If Trump is re-elected and the ACA is struck down, he will also need to work with Congress to negotiate a replacement to the law, or targeted legislation to sustain favorable pieces. This will be particularly challenging should the Democrats take control of both chambers, as they would then have the ability to pass their own policy priorities, such as a public option, placing the decision to support or veto squarely on the president. If Republicans retain the majority in the Senate, all parties will need to negotiate and compromise. If history is any guide, this will be a long and arduous process for lawmakers.


For more information, contact Mara McDermott, Rachel Stauffer, or Michael Kimberly (McDermott Will & Emery – Partner).